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Going Global The Acer Way

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DQI Bureau
New Update

Stan Shih

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Stan Shih, Chairman and CEO of the Acer Group has described how Acer utilized its three major strategies–‘fast-food business model,’ ‘client-server organizational structure’ and ‘global brand, local touch’–to successfully develop its overseas market, in his book ‘Me-Too Is Not My Style.’ This excerpt from the book presents a glimpse into the corporate visions, strategies and business philosophies of the Acer group.

In 1990, Acer’s investments in overseas business suffered a

huge loss. Suddenly, accusations and derision poured upon Acer.

At that time, government agencies questioned our continued

investment plans overseas and journalists criticized that Acer had been ‘dashing’

too fast. Even shareholders and employees were not supportive. Some colleagues

even challenged me directly why the money they worked so hard to earn was lost

in overseas operations.

Almost ten years of smooth globalization operation was

encountering a bottleneck seemingly hard to break through.

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As pressure continued to build up, I had to come up with

solutions. Suddenly an idea occurred to me. Under the circumstances, the only

way to convince our employees and investors was to invite our foreign partners

also to invest in Acer and to share the risk. If we invest, they will invest

more; if we lose, they will lose more. That was the only way that I could

continue to make an investment overseas.

Subsequently, Acer developed a new strategy of ‘global

brand, local touch.’ This strategy solved most issues that had been hampering

Acer’s globalization plan, such as finance, brand name image and management

efficiency. It is like applying the right medication to cure multiple diseases

at once.

Since 1993, Acer has become the number one computer brand in

Latin America, Southeast Asia and the Middle East. In 1994, Acer’s US

operation began to turn profitable after continuously suffering losses for

several years. Acer has since become the ninth largest brand in the US personal

computers market among fierce competition. It made Acer the seventh largest

computer manufacturer worldwide in 1994.

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This strategy does not come from an accidental inspiration

.On the contrary, it is derived from countless lessons, challenges and pressures

and thus formed a unique globalization model for Acer.

My earliest international experience could be traced back to

my days at Qualitron when I was sent to support the US branch office in Los

Angeles. As the office was understaffed, we had to do everything ourselves

including the clumsy way of using a telex. This was a new experience for me–I

had always been an engineer and a manager.

The know-how of internationalization is much more complicated

than expected. In a foreign country where we are not familiar with the people

and the place, it is sometimes difficult to collect a payment. If executives

extend even more credit lines in order to get orders, they will not know where

to recover the bad debt, which may have been created intentionally by customers.

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With this experience of managing an overseas business, we

immediately planned to set up a US office when Acer was started. At about that

time, Edward Change, one of my classmates, who worked for Hewlett-Packard of

Silicon Valley, happened to come back to Taiwan. I invited him to join Acer to

be in charge of the US business. As Edward had never done any business before, I

crammed him with a session on how to do business. He took it seriously and even

tape-recorded the lesson. As such, Acer made the first step in globalization.

Growing with partners

Acer’s US office was officially inaugurated in 1977. Edward

had a 60% share and Acer had 40%.

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Before this office was set up, we could only make 5-10% of

commission out of every sale. After the office was established, Edward would get

goods from suppliers, resell to Taiwan, and Acer Taiwan would pay the commission

to the US office on a regular basis. This way, our US office could get larger

discounts from the US supplier and generate profits from the price difference.

Moreover, the calculation on commission was faster and better assured. More

importantly, the US office could enjoy credit lines extended from the suppliers,

and sometimes Edward would pay for us first.

Acer’s history is a history of continuous partnership. Acer

was co-founded by several schoolmates. The US operation was also a partnership.

The establishment of branch offices in Taichung and Kaohsiung in 1979 was also

composed of 40% from Acer and 20% from three other partners in each city. This

model has greatly influenced Acer’s later strategy of ‘local touch’ and

‘local majority shareholders.’

The Yahoo model represents the

self-service model where the user is responsible for making all the selections,

while the other hand, the Amazon model is automated and based on the software

that comes in many flavors–collaborative filtering, statistical scoring, user

profiles, click-stream and rules-based logic. Both models have strengths and

weaknesses should be mixed and matched based on the target audience and business

purpose of your site. In the self-service model, the software shows no

intelligence and relies entirely upon user interaction, while the automated

model tries to anticipate user behavior without really understanding real world

situations.

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Inadequacy in personalization

The

personalization logic proved incomplete during the holiday shopping period. If

you place an order for family members and friends with divergent tastes, the

site will assume that all the products are being bought for the logged on

customer’s personal use. So, even though you would not normally purchase ‘acid

rock’ music, the site will keep offering similar music CDs to you. The other

question currently is–how will the personalization software adapt to change in

user’s tastes with passage of time?

On the other hand, if the

self-service model were to be adopted, it goes to the other extreme and relies

completely on user input, providing little or no automation.

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One of the good site designs and

personalization concepts is used by the home depot’s site–www.homedepot.com.

It gathers data about your objectives and goals as you browse. You can avoid

filling any forms if you wish. The content is categorized, based on a user’s

goals for coming to the site. Once you identify your goals by selecting one of

the tabs, the site pushes content in a seamless way and it never even appears

that the content is being pushed.

Beyond personalization

Personalization

is becoming the current hype of the web industry today. There are many first

generation players with products that will let you apply some sort of automated

content personalization. The most well known companies in this market segment

are–Andromedia, BroadVision and Net Perceptions. As always, in the race of ‘time

to market’, the first solutions were not tech-savvy but merely automated some

aspects of personalization. Most of the first generation tools still required

significant programming support, editorial staff and other members to make it

work. With many players involved in defining a solution based on personalized

content, the user is not guaranteed a great experience on the site that uses

these tools. With the potential of new tools attacking the same problem in a

different manner, it will be interesting to see the new solutions.

In a nutshell

Current

deployments of personalization represent a solid start. Care must be taken to

not just automate old methods of market analysis with the hope that it will give

better or different answers. In the quest to provide unique experience to every

individual
visiting the site, one ends up intimidating the customer by collecting substantial quantities of data but is unsure of what to do with it.

With increased concern regarding customer privacy and the potential for

legislation, greater sensitivity to methods of collecting profile information

will be required.
 

Rajeev

Nanda

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